$165.6 Billion: The Real Cost of Federal Workforce Cuts

Last Updated: April 19, 2026

The federal workforce shrank by approximately 278,000 employees between January 2025 and February 2026, reaching its lowest level since 1966. DOGE claimed that cutting saved $160 to $215 billion. The Partnership for Public Service ran the actual numbers and found the opposite: the cuts cost the economy $165.6 billion.

That figure, from the Partnership's Federal Harms Tracker released April 9, 2026, breaks into two parts. $71 billion in direct workforce costs that the government actually paid. And $94.6 billion in economic activity lost when science grants were terminated. Both numbers are documented, sourced, and, according to the Partnership's data director Brandon Lardy, "conservative."

Key Takeaways

• Federal workforce actions cost the U.S. economy $165.6 billion, per the Partnership for Public Service's Federal Harms Tracker
• DOGE claimed $160 to $215 billion in savings. Independent verification (American Enterprise Institute) puts actual savings at roughly $10 billion
• The largest single cost: $53.2 billion in productivity losses from disengaged federal workers who remained on the job
• The DRP alone cost $4.5 billion in pay for 137,000 employees who were barred from working
• DC is projected to enter a mild recession with GDP contracting 1.9%, losing more jobs than any other major metro
• IRS workforce cuts could cost the Treasury $198 billion to $600 billion in lost revenue over a decade

The $71 Billion in Direct Workforce Costs

These are dollars the government actually spent, not estimates or projections.

Line Item	Cost
Disengaged federal employees (Gallup 34% productivity formula)	$53.2 billion
2025 partial government shutdown GDP loss	$11.0 billion
Deferred Resignation Program (137,000 employees paid not to work)	$4.5 billion
Severance for 10,400+ RIF'd employees	$764 million
Administrative leave, USAID (contested terminations)	$298 million
Administrative leave, CFPB	$152 million
Administrative leave, USAGM	$126 million
Administrative leave, Dept. of Education OCR	$37 million
DOGE operations	$81 million
Rehiring wrongly terminated employees	$12 million
RIF execution costs	$5.9 million
Total direct costs	$71.0 billion

The disengagement line item ($53.2 billion) is the most debatable. The Partnership surveyed 11,000+ federal workers after OPM cancelled the 2025 Federal Employee Viewpoint Survey, then applied Gallup's research showing disengaged employees cost employers 34% of their annual salary. The "thriving" rate among federal workers dropped from 58% in 2024 to 48% in 2025.

The DRP line ($4.5 billion) is straightforward. 137,000 employees accepted deferred resignation, received an average of $2,055/week plus 38% in benefits, and were contractually barred from working during the administrative leave period. That is $4.5 billion in pay for zero output.

The $94.6 Billion in Lost Economic Activity

This is where the methodology gets more contested.

Terminated Grants	Economic Loss (at $2.56 multiplier)
EPA grants	$72.8 billion
CDC grants	$17.8 billion
NSF grants	$1.8 billion
NIH grants	$1.3 billion
SAMHSA grants	$996 million
USAID closure legal costs	$344 million
Lost NPS fees (shutdown)	$41 million
Total	$94.6 billion

The multiplier comes from a 2024 study by United for Medical Research and the Association of American Universities: every $1 invested in NIH research generates $2.56 in U.S. economic activity through labor, supplies, and local spending. The Partnership applied this multiplier to all terminated science agency grants, not just NIH.

Fair criticism: the $2.56 NIH multiplier may not apply equally to EPA cleanup grants or SAMHSA behavioral health grants. Lardy acknowledged this, calling the total "conservative" because it excludes lawsuit defense costs, long-run IRS revenue loss, and downstream GDP effects.

DOGE's Claims vs. Reality

Source	Figure
DOGE.gov official tracker	$160 to $215 billion in claimed savings
American Enterprise Institute (verified)	~$10 billion
Partnership for Public Service (economic cost)	$165.6 billion in costs
Yale Budget Lab (IRS revenue loss alone, 10-year)	Up to $600 billion

NPR found that all 13 of DOGE's largest claimed contract cancellations contained errors: double-counting, inflated contract ceiling values (the maximum a contract could theoretically reach, not actual spending), or contracts that had already expired. A DOGE employee testified in a March 2026 deposition that DOGE was "unable to lower the federal deficit."

Put differently: for every $1 DOGE verifiably saved, the workforce changes cost the economy $16.

Where the Workforce Went

The federal civilian workforce dropped from approximately 2,313,000 on inauguration day (January 20, 2025) to approximately 2,028,000 by February 2026. That is a 12% decline in 13 months, the fastest peacetime federal workforce reduction on record.

Agency	Reduction	Percentage
USAID	4,895 → 370	-92.4%
National Endowments (Arts/Humanities)	—	-56.6%
AmeriCorps	—	-43.6%
Department of Education	—	-42.6%
Small Business Administration	—	-32.9%
USAGM (Voice of America)	—	-32.7%
National Science Foundation	—	-30.3%
Treasury (including IRS)	-31,600	-28.0%
Veterans Affairs	-10,300	-5 to 10%
Department of Defense (civilian)	-15,029	<5%

Two agencies grew: ICE (+36.1%) and Customs and Border Protection (+1.5%). Every other major department shrank.

For comparison, the Clinton-era National Performance Review (1993 to 2000) cut more total employees (377,000+), but over seven years, with bipartisan legislation that passed 391-17 in the House, targeting Cold War defense positions. The 2025 to 2026 reductions happened in 13 months, without congressional authorization, concentrated in civilian policy, science, and enforcement agencies.

The DC Metro Fallout

The economic damage is not evenly distributed. DC took the heaviest hit.

• DC's GDP is projected to contract 1.9% in FY2026
• A 10% reduction in federal DC employment causes a 2.6% GDP decline (Brookings)
• The DC metro area lost more jobs in 2025 than any other major U.S. metro
• DC's Chief Financial Officer projects a $1 billion revenue shortfall through FY2028
• National long-term unemployment rose by 322,000 over the year, consistent with displaced federal workers struggling to transition

The Bill That's Still Coming

The $165.6 billion figure does not include several costs that are still accumulating.

The Yale Budget Lab estimates IRS workforce cuts will reduce federal revenue by $198 billion over a decade. If the cuts deepen to 28,000 total positions, the loss could reach $600 billion. The IRS is one of the few agencies that generates more revenue than it costs to run. Cutting enforcement staff is the fiscal equivalent of closing a profitable store to save on payroll.

The OPM retirement backlog peaked at 65,237 claims in early 2026. Processing times have stretched to 6 to 9 months. Each delayed claim is a retiree waiting for their full annuity, often living on 60 to 80% interim pay.

The Merit Systems Protection Board has received 11,000+ appeals from terminated employees. Each case requires government lawyers to defend. Several major cases have resulted in reinstatement with back pay, adding to the rehiring costs already tallied above.

Calculate Your Severance

If you are facing a RIF or considering a buyout, the numbers matter. Federal severance follows a statutory formula: one week of pay per year of service, capped at 52 weeks. The 10,400+ employees who were RIF'd through formal procedures received an average of approximately $73,000 in severance.

Use the Severance Pay Calculator to estimate your specific payout. If you are weighing VERA/VSIP, the VERA/VSIP Decision Calculator compares your buyout offer against staying.

Frequently Asked Questions

Where does the $165.6 billion figure come from?

The Partnership for Public Service's Federal Harms Tracker calculated the total as of their April 9, 2026 press briefing. It combines $71 billion in direct workforce costs with $94.6 billion in economic activity lost from terminated science grants. The Partnership's data director called it "a conservative estimate" because it excludes IRS revenue loss, lawsuit costs, and downstream GDP effects.

How much did DOGE actually save?

DOGE's official tracker claimed $160 to $215 billion. The American Enterprise Institute, a center-right think tank, verified approximately $10 billion after removing double-counting and inflated contract ceiling values. NPR found that all 13 of DOGE's largest claimed cancellations contained errors.

What is the most debatable part of the $165.6 billion?

The $53.2 billion disengagement cost (Gallup formula applied to a Partnership survey of 11,000+ workers) and the $94.6 billion science grant multiplier (using a NIH-specific $2.56 multiplier across all science agencies) are the most methodologically contested components. The direct pay costs ($4.5B DRP, $764M severance, $613M administrative leave) are the most defensible.

Could IRS cuts really cost $600 billion?

The Yale Budget Lab modeled this scenario: if IRS enforcement staff drops by 28,000, the resulting reduction in audits and collections could reduce federal revenue by $600 billion over a decade. A more conservative estimate from the same analysis puts the figure at $198 billion. Either way, the IRS is one of the few government agencies that generates more revenue than it costs to operate.

How does this compare to past workforce reductions?

The Clinton-era National Performance Review (1993 to 2000) cut 377,000+ employees, but over seven years with bipartisan legislation and targeted at Cold War defense positions. The 2013 sequestration furloughed 770,000+ workers temporarily but did not create permanent separations at scale. The 2025 to 2026 cuts are the largest and fastest peacetime reduction on record, concentrated in civilian agencies and executed without congressional authorization.

Related Resources

• Severance Pay Calculator: Estimate your RIF severance payout
• VERA/VSIP Decision Calculator: Compare buyout vs. staying
• FERS Retirement Calculator: Model your pension if you're considering early retirement
• State of the Federal Workforce 2026: Our flagship annual report with 50+ workforce statistics
• DRP Cost: The Government Paid $4.5 Billion: Deep dive on the Deferred Resignation Program
• Federal Workforce at Lowest Since 1960s: Historical headcount context
• DOGE Contract Cancellation Costs: How contract terminations added to the bill
• RIF Survival Guide 2026: Your rights during a Reduction in Force

Sources

• Partnership for Public Service — Federal Harms Tracker
• Government Executive — Federal workforce changes cost $165.6B
• Federal News Network — $4.5 billion DRP cost
• Pew Research Center — Federal workforce shrank 10%
• Yale Budget Lab — Weakened IRS revenue consequences
• American Enterprise Institute — DOGE verified savings
• Brookings — DC region economic warning signs
• GAO-26-108719 — Federal agency workforce changes
• NPR — DOGE data doesn't add up